Second supplement to Hudson’s Building and Engineering Contracts published

Built on the wealth of practical, commercial and legal experience accumulated by the authors, Hudson’s Building and Engineering Contracts provides a comprehensive update on the law and interpretation of construction contracts.

In the second supplement several interesting cases are noted:

The most important recent case in relation to the liability of design and build contractors for fitness for purpose obligations was the Court of Appeal decision in MT Højgaard A/S v E.On. That decision was discussed in the 13th Edition and raised the possibility that absolute obligations for fitness for purpose would be limited or excluded in a contract where there was a skill and care obligations for the design of the same component. The decision has now been reversed in the Supreme Court. The judgment of Lord Neuberger makes plain that it is possible for absolute obligations and skill and care obligations in respect of fitness to exist side-by-side and overlap. It is discussed in Chapter 3 of this Supplement. There are many aspects of fitness for purpose which in theory might have been raised in that case which remain unresolved.

In Chapter 1 and Chapter 3 several cases are mentioned where good faith has been considered, and generally no term of good faith has been implied. The approach in the Canadian case of Bhasin v Hrynew has not been adopted in England and Wales.

The Court of England and Wales have continued to treat exclusion clauses with less suspicion, as in Transocean Drilling UK Ltd v Providence Resources Plc, the Arctic III reported in the First Supplement, and in Taberna Europe CDO II Plc v Selskabet (formerly Roskilde Bank A/S), and other cases reported or footnoted in this supplement.

In Gabriel v Little the Supreme Court has revisited the scope of recoverable loss for advice and information provided by professionals, and explained the leading case of SAAMCO in clearer terms. This explanation may make it easier to identify where construction professionals are potentially liable for all the foreseeable losses caused by an error, and where their liability extends only to some of them.

A first instance decision where it was found that there was no contract between the Employer and a landscape architect but which imposed a Hedley Byrne v Heller duty of care in respect of economic loss, Burgess v Lejonvarm has been upheld, with slight modifications, in the Court of Appeal. It remains the case that the ambit of duties for negligent misstatement under Hedley Byrne v Heller is wider for professionals than for builders. The Court of Appeal considered that the difference in treatment continues to be justified.

There are also various new cases on adjudication, and on miscellaneous topics including misrepresentation, deceit, contributory negligence, notices, repudiation, extensions of time, and bonds.